Reed: How is that even possible? No. We are paying more for content, but we view as a positive. As long as subscriber growth continues.

11:23: What's the relationship with Hollywood?

Reed: If you have a big checkbook, it takes care of itself.

11:24: We look at what our sub count will be by the end of the year, and then our content budget will based on that.

11:24: What would be your dream of content?

Reed: Consumers want all the new stuff, but the new stuff is expensive. We can't do that at $8 per month. We're a vast selection with incredible breadth. We're more of a compliment.

We're not focused on getting immediate releases.

11:26: Reed talking about cord cutting, says it's not happening. In the long run Netflix is competing with cable companies on a time/budget basis. Biggest competition over time will be the cable companies getting better and bundling the TV Everywhere model. They're a formidable competitor. Look at "Xfinity iPad app, it's a really nice piece of work."

11:30: We have to make personalization work. We have to make social work.

11:31: Is the ultimate endpoint a sale of the company?

Reed: No, we're focused on growing the business. We have a very long term future. We're 23-24 million subscribers. Over 10,20,30 years fiber optic, broadband will get to the rest of the world, which is 5 billion people. We have room to grow.

11:33: We've expanded into Canada (because we're bold, har har.) Next country is in the second half of the year. The better it goes the more money we lose because we will invest more and more.

11:35: How important is Asia?

Reed: Very important, China is tough. Japan, Indonesia, India, all great markets. One thing we're most proud of, we're beating BitTorrent, impressive since it's free. More content is paid now. Around the world piracy is huge. We hope to beat that.

11:37: Original content. We want to show prior season of Showtime, HBO. We do better on catalog. That generates demand for the current season. On House of Cards, we're licensing from the maker.

11:40: Hbo strategy is if you want old HBO, subscribe to HBO and get it on HBO Go.

11:41: How do you look at Hulu?

Reed: Well, there's Hulu, YouTube, etc. We don't compete with each other, but compete with time and hours with telco. Do you use Netflix or a cable network?

11:42: Devices ...

Reed: We're on a lot of things. Video is nice on mobile when you're working out, or commuting, but it's big on television, so it's about getting on Televisions. Most will have an app store, and will probably run some flavor of Android.

11:45: Most consumers want the connected TV because it now has apps.

When people watch on Apple TV, they watch a lot.

11:46: What do you want for iCloud?

Reed: Ahhhh, errm. We just think about what we want.We don't think about other companies products.

On Apple TV, we don't see any problem being on there.

Reed on the future ... It's all about bringing fiber to the home. Google's experiment in Kansas City is incredible.

11:48: What about the broadband you're suking up?

We're non-existent on the internet backbone. Consumers are watching Netflix.

11:49: Onto MSFT ... how did you get on the board?

They want someone from tech and they compete with everyone from tech, so they got down to a DVD mailer.

How do you respond to Ballmer attack?

I care about the company. The best way for me to serve the shareholders is to not answer your question. A straight no comment.

11:50: How long will you run Netflix?

I don't know ... a long time. I've got board members in the audience.

11:51: We fear getting slow and stodgy. I don't think we've missed anything yet, but that can change at any point.

Surprised at lack of competition?

5 years ago BlockBuster was rival ... but they're gone. We have tons of content, let the users choose.

Audience Q&A

11:56: Public CEOs addressing the investors?

Whitney Tilson is a friend, we donate to similar companies. I saw he was short NFLX and I didnt want him to lose money. Couldnt sit down with him personally (per financial rules), so I wrote a letter. If you have a friend on the short side and you think he's wrong it's great to tell him.

11:58: Netflix competes for a small part of the pie. We're a channel in the future world. Not an internet MSO.

11:59: What show would you like if you could wave a wand?

The Wire, but it's HBO so it needs a big big check.

11:59: We don't expect to do news or sports. It's about focus. We're not going to do how-to videos. Some brand will rise around that. And that's a different brand.

12:03: What about ad supported web video?

Hulu/YouTube will attack that. We decided to do subscription from day one. For sure, ads will be a rich aread, but not for us.

12:04: View on broadband caps?

In general, the internet is going to grow. We're going to have a gigabit uncapped in a few years. Once you lay fiber optic, it's nearly free to have internet flowing. I was in Costa Rica, and there was fiber being laid and it was prioritized over paving roads.

12:06: I discover content on Netflix, but there is no social compent. What up w. that?

There should be a social element. We tried to build our own social net, but people didnt want to use it. We're trying to figure out integration. Think of it as a 5 year investment path.

12:09: Talking about piracy ... talking about having solutions that dont encourage piracy. That's what Netflix is trying to do.